Blue Energy will fund the entire cost of a 3D seismic survey and 75% of the Rossco-1 well, due for drilling in late November to early December, via secured convertible investment loans by Energy Investments, which has acquired all of the share capital in the company.
Great Artesian’s exploration strategy is to farm out its exploration projects to expand its opportunities, managing director Ray Shaw said.
The management team has so far been successful in structuring farm-in partnerships that succeed in spreading the exploration risk without taking control of the projects completely out of Great Artesian’s hands, by operating on a ‘no discovery, no earn’ basis.
Shaw said the policy was security against the development of ‘unwieldy’ joint venture groups, allowed Great Artesian to retain control of its key areas and was a response to the market’s failure to validate 100%-owned discoveries.
“Whilst we’re cashed up, we’re trying to preserve our cash reserves by farming out whatever we can, bringing investment down to reasonable levels,” Shaw said.
Under the first farmin agreement, Blue Energy’s wholly owned subsidiary Everdue has provided $850,000 to fund the acquisition of about 80 square kilometres of 3D seismic data across the Paranta farmin block in PEL 106. This block contains the existing Paranta-1 and Nutmeg-1 gas discoveries made in 2004 by Great Artesian.
Following the acquisition and interpretation of the 3D seismic data, Everdue will have until March 31 next year to elect whether to fully fund an exploration well within the area to earn a 50% interest in any production licence resulting from a commercial discovery.
Everdue will also have options to drill subsequent farmin wells on similar terms in the Paranta Farmin block, Great Artesian said.
The second farmin agreement involves Blue Energy’s wholly owned Kompliment Pty Ltd funding 75% of the Rossco-1 well, scheduled for drilling in late November to early December, in order to earn a 37.5% interest in any production licence if that well makes a commercial discovery.
Rossco-1 is about 5km north of the Smegsy-1 gas/condensate field and 4 km south of the Paranta-1 gas/condensate discovery in PEL 106.
It will target similar Patchawarra Formation sandstone reservoirs in a structure with the potential to host about 27 billion cubic feet of gas (P10), Great Artesian said.
This will be the first financing activity undertaken by Energy Investments, an Australian listed energy investment company, in the Cooper Basin and provides the firm with immediate exposure to two potential discoveries and early production within an existing proven hydrocarbon area, it said.
“These farmins will provide funding for exploration in a strategic portion of the Patchawarra Trough, which is known to have generated both oil and gas in close proximity to existing pipeline infra-structure,” Shaw said.
Blue Energy is a Sydney based 'niche' energy company. It aims to become a vertically integrated organisation within three years, involved in the exploration, production and distribution of 'clean gas', electricity and renewable energy in Australia.