Diamond Offshore-owned semi-submersible drilling rig Ocean Apex has been hired for the drilling of the Ironbark prospect in exploration permit WA-359-P located offshore Western Australia.
The 2014-built Ocean Apex semi-submersible drilling rig has been contracted by BP, which is acting as operator on behalf of Cue Exploration under a co-ordination agreement, Cue informed on Wednesday.
Cue Energy CEO, Matthew Boyall, says Cue estimates the Ironbark prospect contains a best estimate of 15tcf of prospective recoverable gas resource.
“Ironbark is a genuinely world-scale prospect in a highly prospective address.”
He added: “Securing the Ocean Apex sets a clear path for drilling. The rig contract, escrow funding and shareholder approval for New Zealand Oil & Gas to farm in have all been satisfied. NOPTA approval of an extension to the permit term to allow the well to be drilled is a remaining condition and Cue expects to submit an application soon.”
Drilling in late 2020
WA-359-P is located in the Carnarvon Basin, offshore Western Australia. The Ironbark-1 well, expected to drill to 5500m, will be the first test of the Ironbark prospect. Drilling is expected to begin in late 2020, following completion of the Ocean Apex’s other commitments.
Namely, from early May 2019 until late July 2019, the rig will be working for Woodside. Then, from early August until early October 2019, it will be working for Shell on a one-well contract. After that, the rig will once again go work for Woodside from early January 2020 until late September 2020.
Cue said that BP had initiated environmental planning activities for a site survey of the well location and the drilling activities.
Cue, BP, Beach Energy, and New Zealand Oil & Gas announced a co-ordination agreement on October 26, 2018, which provides for BP to act as operator on behalf of Cue in planning the Ironbark-1 well prior to title transfers and creation of a formal joint venture.
As required under the coordination agreement, Cue has contributed $8.08 million from its existing cash into an escrow account to secure the proportion of its costs that are not carried by other parties. Cue will receive interest on the escrowed amount until drawn, which is expected to be closer to the well start date.
With funding from the other parties on completion of the agreement, full funding for the Ironbark well is agreed.
The execution of the rig contract and Cue’s funding of the escrow account satisfy two outstanding conditions to completion of the co-ordination agreement, BP Option agreement and farm-in agreements with Beach and New Zealand Oil & Gas. Regulatory approval of an extension to the WA-359-P permit to allow time to drill is also required. Cue is preparing an extension application for submission to the National Offshore Petroleum Titles Administrator (NOPTA).
If all conditions are satisfied and regulatory approvals received, the co-ordination agreement provides for BP to become the operator of the permit. The participating interests in the permit will then be: BP (operator) 42.5%; Cue 21.5%; Beach Energy 21%; and, New Zealand Oil & Gas 15% interest.