Melbana changes Beehive prospect work program

Australian offshore regulator has granted Melbana Energy an extension to work conditions on the WA-488-P permit, which contains the Beehive prospect, giving the company more time to drill the first well.

Melbana, formerly known as MEO Australia, is the operator of the WA-488-P offshore permit with a 100% interest.

The company informed on Tuesday it has been notified by the National Offshore Petroleum Titles Administrator (NOPTA) of the approval of its application to vary the WA-488-P work program by suspending and extending Permit Year 2 by six months to September 21, 2018.

The timeframe within which to drill the Beehive-1 exploration well has also been extended commensurately, Melbana added.

As reported on December 12, 2017, Melbana executed a seismic funding and farm-in option agreement with Total and Santos in relation to WA-488-P, which contains the giant multi billion barrel Beehive prospect.

The agreement provides for Total and Santos to fully fund 100% of the cost of a 3D seismic survey over the Beehive prospect in consideration for which, they are granted an option (exerciseable together or individually) to acquire a direct 80% participating interest in the permit.

If the option is exercised, Total and/or Santos will fully fund the costs of all activities until completion of the first well in the WA-488- P permit. In the event of a commercial discovery, Melbana will repay carried funding from its share of cash flow from the Beehive field. Melbana will have no re-payment obligations for such carried funding in the event there is no commercial discovery and development in WA-488-P.

Melbana explained that the acquisition of a new 3D seismic survey over Beehive will provide potential for further de-risking of the prospect and will facilitate consideration of a preferred location for the Beehive-1 exploration well.

Planning for a 3D seismic survey is progressing, with the environmental permit application lodged on February 8, 2018 and acquisition targeted to start in mid-2018.

According to the revised work program for the WA-488-P, following the expiry of the Permit Year 2, the Permit Year 3 starts on September 22, 2018 and ends a year later, on Sep 21, 2019. The work requirements for Year 3 include drilling of one exploration well.

In Year 4 and Year 5 work requirements include 400km2 new 3D seismic survey and geological and geophysical studies, respectively. Work requirements for Year 6 (from Sep 22, 2021 to Sep 21, 2022) include drilling of one exploration well.

Melbana CEO, Robert Zammit, commented on the announcement: “We are pleased to receive this extension to the permit conditions from the regulator. It allows sufficient time for the WA-488-P stakeholders to obtain the pre-requisite regulatory approvals to enable the Beehive 3D seismic survey to proceed mid-year as targeted. Planning for the 3D survey is proceeding well and we look forward to keeping our shareholders updated as project milestones are achieved.”

WA-488-P

The Beehive prospect is potentially the largest undrilled hydrocarbon prospect in Australia. It is a Carboniferous age 180km2 isolated carbonate build up with 400m of mapped vertical relief, analogous to the giant Tengiz field in the Caspian Basin. It is located in 40m water depth suitable for a jack-up rig, within about 75km of shore and developable by either FPSO or pipeline to existing infrastructure. This play type is new and undrilled in the Bonaparte Basin with no wells having been drilled to this depth in the basin.

Beehive is located close to several existing facilities including Ichthys project and Blacktip field and pipeline offering several options for future gas monetization.

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