Arrow executive director Stephen Bizzell said the company had reached an agreement with Strike Oil for Bow to earn its 10% interest in tenement TP/17 by funding 15% of the costs of the Altostratus-1 well in the Carnarvon Basin in offshore Western Australia.
Bizzell said Altostratus-1 would test multiple targets at four different levels, including a principle target at the Cretaceous Stag Sand which hosts the 55 million barrel Stag oil discovery 20km away.
“Strike Oil has outlined a prospect for Altostratus based on a three dimensional seismic survey, with the mean prognosed recoverable oil potential in Altostratus expected to be around 21 million barrels and an upside of 48 million barrels in the M.australis Sand objective,” said Bizzell.
“In addition the C.halosa Sand and N.gracilis Sand objectives in Altostratus-1 also have mean recoverable oil potential of 16 million barrels (upside 37 million barrels) and 12 million barrels (upside 29 million barrels) respectively.”
Strike Oil said the agreement will save it around $0.5 million with the company retaining a 90% interest in the well and significant value add leverage to any discovery.
Additionally Bow Energy will have an option to acquire a 10% interest in two further permits, TP/19 and EP 421 in the Carnarvon Basin, by committing to the ongoing work program in these permits. If Bow Energy elects to exercise the option, Strike Oil’s interest in these two permits will reduce from 100% to 90%.
Bizzell said Arrow would separate the group’s assets with Arrow Energy focused on its core business of coal seam gas exploration and production, while Bow Energy would focus on conventional oil and gas exploration and production.
He said Bow Energy would be spun out as a separate listed company within six months. “The forward strategy is to amalgamate Arrow’s conventional oil and gas assets into Bow Energy, allowing Arrow to concentrate its management and financial resources on its considerable coal seam gas assets.”
“The board of Arrow Energy will finalise which of Arrow’s current assets will fit into the new company in the next few weeks and will also consider other project opportunities.” He said that as part of the Altostratus farm-in, Bow would also earn an option to farm-in to a 10 percent interest in TP/19 and EP421 in the Carnarvon Basin, about 25km south east of Stag,” said Bizzell.
“The operator Strike Oil has outlined the Sharp Peak prospect with a prognosed mean recoverable oil potential of 41 million barrels and an upside of 83 million barrels,” he said. He said details of the upcoming initial public offering and restructure, including an in-specie distribution of Bow Energy shares to Arrow shareholders, would be released in the next few weeks.”
Strike Oil managing director, Simon Ashton said, “This agreement allows us to defray significant costs while retaining the upside of a 90% interest in the well. We are committed to actively manage our exploration portfolio to deliver real value to our shareholders by continually assessing farmout opportunities.”
