Melbana Energy said it has executed a seismic funding and farm in option agreement with Total and Santos in relation to Melbana’s 100% owned WA-488-P, which contains the 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.
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 has already begun, with acquisition expected to start mid-2018.
Melbana’s CEO and MD Peter Stickland, said: “Our longstanding belief that Beehive is one of the most significant oil and gas prospects in Australia, coupled with our continuing efforts to use the technical resources available to us to better define this prospect have been validated by the signing of this agreement with two world class companies in Total and Santos. This transaction provides a pathway for Melbana to be fully carried for a 20% participating interest in the drilling of Beehive, with a firm commitment by Total and Santos to fund a 3D seismic survey, and then pre-agreed farmin terms for the drilling of a well in WA-488-P if either Total or Santos elect to proceed after the seismic data is acquired.
“Melbana welcomes Total and Santos as partners and we are excited by the opportunity to unlock the huge potential of the Beehive prospect for our shareholders. We will now proceed to work with our partners to ensure the 3D seismic survey gets underway as soon as possible.”
Beehive is currently defined by a tight grid of 2D seismic data. Melbana has recently undertaken a reprocessing and inversion study of selected 2D seismic lines across Beehive with very encouraging results. The seismic inversion results combined with the results of the reprocessing have enhanced the understanding of the Beehive reservoir and seal units. The acquisition of a new 3D seismic survey over Beehive will provide potential for further de-risking of the prospect and facilitate consideration of a preferred location for the Beehive-1 exploration well.
Beehive is located close to several existing facilities including Ichthys project and Blacktip field and pipeline offering several options for future gas monetization. Potentially the largest undrilled hydrocarbon prospect in Australia, the Beehive prospect is characterised as having significant prospective resources as outlined in the following table: